Second Edition of The Sedona Principles and the Need for Proportionality

The Sedona Conference this week published the second edition to The Sedona Principles: Best Practices Recommendations & Principles for Addressing Electronic Document Production (June 2007). As a Sedona Conference member, I may be somewhat biased, but it is safe to say that everyone in the e-discovery world considers The Sedona Principles a key document for understanding electronic discovery and best practices. This is especially true of the judiciary, who play an active role in Sedona. Many district court judges across the country cite to The Sedona Principles and consider it to be authoritative. The new Principles can be downloaded for free at the Sedona website, so long as the copy is for your personal use only.

If you have not read the first edition published in 2004 (with annotations revised in 2005), I strongly recommend you now go ahead and read this new and improved second edition. To those who have studied the original Sedona Principles, relax, the 14 Principles remain the same, although they have been reworded somewhat. This is a refined and updated version, not a radical rewrite, which is hardly necessary or appropriate after only three years. But, you will still want to download and begin using this new version ASAP. It is a significant improvement over the first edition in several respects.

First, and most importantly, the second edition now ties directly into the new Federal Rules of Civil Procedure, most of which were significantly influenced by the Principles. The interface between the 14 Principles and the new rules is well explained. All of the Principle Commentaries have been updated and refined, but especially the Commentaries for Principle 12 on metadata, and Principle 14 on the imposition of sanctions. The Resources and Authorities provided with each Comment have been updated to include several new e-discovery cases and articles. In the process the total text has grown 30%, from 56 to 73 pages (excluding Appendixes). Finally, the second edition is more user-friendly and better written than before. For instance, it now includes a handy chart in the front that lists Topics correlating to the Principles, Federal Rules, and Sedona Commentary.

The new Preface makes the point that the Conference tried to keep the “rule of reasonableness” foremost in mind when writing and revising these e-discovery principles and best practices.

That rule is embodied in Rule 1 of the Federal Rules of Civil Procedure (courts should secure the just, speedy and inexpensive determination of all matters) and is applied through former Rule 26(b)(2) (now renumbered as Rule 26(b)(2)(C) – proportionality test of burden, cost and need) and in many state counterparts. The rule of reasonableness means that litigants should seek – and the courts should permit – discovery that is reasonable and appropriate to the dispute at hand while not imposing excessive burdens and costs on litigants and the court.

The best practices recommended by Sedona must always be tempered by proportionality. In other words, what may be reasonable for a ten million dollar case may be impractical for a routine case that barely makes the federal jurisdictional minimum. That point is also embodied in Principle 2, which counsels application of the proportionality standard in making a costs-versus-needs analysis to determine what e-discovery efforts are appropriate. The Preface goes on to expand upon this point as follows:

Electronic discovery is a tool to help resolve a dispute and should not be viewed as a strategic weapon to coerce unjust, delayed, or expensive results. The need to act in good faith also extends to the efforts taken to reasonably preserve relevant electronic information, to the form of the production, and to the allocation of the costs of the preservation and production. All discovery issues should be considered in light of the nature of the litigation and the amount in controversy, as well as the cost, burden, and disruption to the parties’ operations.

If only all counsel would remember and follow these wise dictates, and judges would enforce them, we would all be better off. The reality is, many litigants are misusing e-discovery as a strategic weapon, including the so-called “weapons of mass discovery” as discussed in my June 20, 2007, Blog on discovery of computer RAM memory.

This is a key point for me, and so I am pleased that the newly revised Comment 2.b. now emphasizes how the total costs of e-discovery must be considered, not just the costs of retrieval and production:

Costs cannot be calculated solely in terms of the expense of computer technicians to retrieve the data but must factor in other litigation costs, including the interruption and disruption of routine business processes and the costs of reviewing the information. Moreover, burdens on information technology personnel and the resources required to review documents for relevance, privilege, confidentiality, and privacy should be considered in any calculus of whether to allow discovery, and, if so, under what terms. In addition, the non-monetary costs (such as the invasion of privacy rights, risks to business and legal confidences, and risks to privileges) should be considered. Evaluating the need to produce electronically stored information often requires that a balance be struck between the burdens and need for electronically stored information, taking into account the technological feasibility and realistic costs involved.

Comment 2.b. at page 17 of Sedona Principles.

This point about hidden costs needed to be emphasized. It has been overlooked multiple times in the last several years, especially by over-reaching plaintiffs and less-discerning judges. The disruption and privacy factors are hard to quantify, but are very real and burdensome. Further, the cost of review is skyrocketing out of control, despite some attempts to export the work to low paid hourly lawyers in India. The attorney fees incurred to review ESI for relevance, privilege, confidentiality, and the like, now constitute the bulk of all e-discovery expenses. The estimates I have seen range from a low of 40% to a high of 60% of total e-discovery costs.

All of these costs, especially review expenses, should, in my opinion, be considered by the courts in any proportionality analysis of whether to allow discovery, or to shift the costs of discovery. These costs should be considered regardless of whether or not the ESI at issue is “reasonably accessible.” Unfortunately, Rule 26(b)(2)(B) does not expressly say that. It provides for cost-shifting only if the ESI is inaccessible. For that reason, a request for accessible ESI that would impose unreasonable expenses on the producing party must be opposed on the proportionality test under Rules 1 and 26(b)(2)(C), Federal Rules of Civil Procedure, and Sedona Principle 2. Only in this way can the integrity of the judicial system be protected from the intentional misuse of e-discovery to force settlements based on expense avoidance, instead of merit.

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This entry was posted on Thursday, July 12th, 2007 at 2:36 pm and is filed under Lawyers Duties, New Rules, Related Legal Webs. You can follow any responses to this entry through the RSS 2.0 feed.
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4 Responses to Second Edition of The Sedona Principles and the Need for Proportionality

With respect to the point you make in the last paragraph you may be interested to read “‘Peskoff’, Cost-Shifting and Accessible Data”, an article by H. Christopher Boehning and Daniel J. Toal that was published in the 6/26/07 edition of the New York Law Journal.

I recommend you read the whole article, but here are a few excerpts from Boehning and Toal:

“Although the new Rule 26(b)(2)(B) now explicitly acknowledges that “conditions” can be imposed on the discovery of inaccessible data, neither it nor any other rule states, explicitly or implicitly, that cost-shifting or other conditions cannot be considered when accessible data is at issue. Indeed, since courts clearly retain the discretion to deny discovery outright under Rule 26(b)(2)(C), it stands to reason that they necessarily have the lesser power to condition production on the requesting party’s payment of the costs of production.”

“Perhaps most persuasively, Judge Lee H. Rosenthal, chair of the Advisory Committee on the Federal Rules of Civil Procedure that crafted the amendments, also recently addressed this specific issue and reached the same conclusion. In discussing the amended Rule 26, he stated that “[t]he amended rule does not say that judges may only consider cost allocation if … the electronically stored information is not reasonably accessible. … Nor does the amended rule preclude producing parties from seeking to shift costs of producing electronically stored information that is reasonably accessible. Lee H. Rosenthal, “A Few Thoughts on Electronic Discovery After December 1, 2006,” 116 Yale L.J. POCKET PART 167, 180-81 (2006).”

“In these circumstances, a district court should have the discretion to entertain either an outright limitation on the scope of the search under Rule 26(b)(2)(C) or a cost-shifting protective order under Rule 26(c). In the words of a leading treatise on federal practice, “it is not self-evident that every discovery request of electronically stored information on accessible active databases will not entail undue costs and burdens, solely because they are on an active database,” and therefore “cost-shifting may be appropriate” even when accessible data is sought. MOORE’S FEDERAL PRACTICE §37A.36 (2007).”

[…] important input on the scope of a hold, including the key ”proportionality” criteria that I have written about before, namely the consideration of the amount in controversy and related factors. Guideline 7: In […]

About the Blogger

Ralph Losey is a practicing attorney and shareholder in a national law firm with 50+ offices and over 800 lawyers where he is in charge of Electronic Discovery. All opinions expressed here are his own, and not those of his firm or clients. No legal advice is provided on this web and should not be construed as such.

Ralph has long been a leader of the world's tech lawyers. He has presented at hundreds of legal conferences and CLEs around the world. Ralph has written over two million words on e-discovery and tech-law subjects, including seven books. He is also the founder of Electronic Discovery Best Practices, and e-Discovery Team Training, an online education program that arose out of his five years as an adjunct professor teaching e-Discovery and Evidence at the UF School of Law. Ralph is also publisher and principle author of this blog and many other instructional websites.

Ralph is a specialist who has limited his legal practice to electronic discovery and tech law since 2006. He has a special interest in software and the search and review of electronic evidence using artificial intelligence, and also in general AI Ethics. issues. Ralph was the only private lawyer to participate in the 2015 and 2016 TREC Recall Track of the National Institute of Standards and Technology and prior to that competed successfully in the EDI Oracle research.

Ralph has been involved with computers, software, legal hacking and the law since 1980. Ralph has the highest peer AV rating as a lawyer and was selected as a Best Lawyer in America in four categories: Commercial Litigation; E-Discovery and Information Management Law; Information Technology Law; and, Employment Law - Management. Ralph also received the "Most Trusted Legal Advisor" industry award for 2016-17 by the Masters Conference. His full biography may be found at RalphLosey.com.

Ralph is the proud father of two children, Eva Losey Grossman, and Adam Losey, a lawyer with cyber expertise (married to another cyber expert lawyer, Catherine Losey), and best of all, husband since 1973 to Molly Friedman Losey, a mental health counselor in Winter Park.

Sedona Principles 3rd Ed

1. Electronically stored information is generally subject to the same preservation and discovery requirements as other relevant information.

2. When balancing the cost, burden, and need for electronically stored information, courts and parties should apply the proportionality standard embodied in Fed. R. Civ. P. 26(b)(2)(C) and its state equivalents, which require consideration of importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.

3. As soon as practicable, parties should confer and seek to reach agreement regarding the preservation and production of electronically stored information.

4. Discovery requests for electronically stored information should be as specific as possible; responses and objections to discovery should disclose the scope and limits of the production.

5. The obligation to preserve electronically stored information requires reasonable and good faith efforts to retain information that is expected to be relevant to claims or defenses in reasonably anticipated or pending litigation. However, it is unreasonable to expect parties to take every conceivable step or disproportionate steps to preserve each instance of relevant electronically stored information.

6. Responding parties are best situated to evaluate the procedures, methodologies, and technologies appropriate for preserving and producing their own electronically stored information.

7. The requesting party has the burden on a motion to compel to show that the responding party’s steps to preserve and produce relevant electronically stored information were inadequate.

8. The primary source of electronically stored information to be preserved and produced should be those readily accessible in the ordinary course. Only when electronically stored information is not available through such primary sources should parties move down a continuum of less accessible sources until the information requested to be preserved or produced is no longer proportional.

9. Absent a showing of special need and relevance, a responding party should not be required to preserve, review, or produce deleted, shadowed, fragmented, or residual electronically stored information.

10. Parties should take reasonable steps to safeguard electronically stored information, the disclosure or dissemination of which is subject to privileges, work product protections, privacy obligations, or other legally enforceable restrictions.

11. A responding party may satisfy its good faith obligation to preserve and produce relevant electronically stored information by using technology and processes, such as data sampling, searching, or the use of selection criteria.

12. The production of electronically stored information should be made in the form or forms in which it is ordinarily maintained or in a that is reasonably usable given the nature of the electronically stored information and the proportional needs of the case.

13. The costs of preserving and producing relevant and proportionate electronically stored information ordinarily should be borne by the responding party.

14. The breach of a duty to preserve electronically stored information may be addressed by remedial measures, sanctions, or both: remedial measures are appropriate to cure prejudice; sanctions are appropriate only if a party acted with intent to deprive another party of the use of relevant electronically stored information.